BlackRock Greater Europe Investment Trust Regulatory News (BRGE)

BlackRock Greater Europe Investment Trust Plc - Half-year Report

PR Newswire

London, April 22

BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC

LEI: 5493003R8FJ6I76ZUW55

Half yearly financial announcement of results in respect of the six months ended 29 February 2020 

PERFORMANCE RECORD

FINANCIAL HIGHLIGHTS

1 Alternative Performance Measure, see Glossary in the Half Yearly Financial Report.2 The change in net assets reflects the buyback of shares into treasury, market movements and dividends paid.3 Further details are given in the Glossary in the Half Yearly Financial Report.

CHAIRMAN’S STATEMENT FOR THE SIX MONTHS TO 29 FEBRUARY 2020

MARKET OVERVIEWAlthough my comments below relate to the period ending February 2020, they must also be viewed in the context of the massive changes both in outlook and in market valuations that have occurred during the month of March as a result of the coronavirus pandemic.

Equity investors enjoyed a rewarding year in 2019 with a combination of high returns and low volatility. Investor sentiment at the end of the year was also cautiously optimistic as geopolitical risks, which had been elevated during 2019, appeared to moderate during the fourth quarter. Europe’s exposure to trade and reliance on manufacturing had made it a casualty of the US-China trade conflict, but the unexpected announcement from the US of a Phase 1 trade deal took markets by surprise in December. The outcome of the UK general election in the same month also brought some political clarity to the UK’s exit from the European Union (EU), although the UK still needs to negotiate a trade agreement with the EU by the end of 2020.

At the start of the year, European markets fell as investors became concerned about the COVID-19 outbreak in China and its potential impact on financial markets and global trade. The spread of the coronavirus to other countries, compounded by plunging oil prices after Saudi Arabia said they would ramp-up oil output, then sent global stock markets tumbling.

PERFORMANCEDuring the six months ended 29 February 2020, the Company’s net asset value per share (NAV) returned -1.0%, outperforming the FTSE World Europe ex UK Index which returned -5.1%. Over the same period, the Company’s share price returned -0.5% (all percentages calculated in sterling terms with dividends reinvested). Further information on investment performance is given in the Investment Manager’s Report.

Since the period end to 24 April 2020, the Company’s NAV has decreased by 6.8% compared with a fall in the FTSE World Europe ex UK Index of 9.3% over the same period.

EARNINGS AND DIVIDENDSThe Company’s revenue return per share for the six month period ended 29 February 2020 amounted to 0.56p compared with 0.41p for the corresponding period in 2019, an increase of 36.6%. The Board has declared an interim dividend of 1.75p (2019: 1.75p) per share. The dividend will be paid on 10 June 2020 to shareholders on the Company’s register on 15 May 2020, the ex-dividend date being 14 May 2020. Shareholders should note that, due to the COVID-19 outbreak, some of our investee companies may come under pressure to cut their level of dividend payments, thereby reducing the Company's revenue return for the current financial year.

TENDER OFFERS/SHARE REPURCHASESThe Board has the option to implement a tender offer in order to assist in controlling the discount to NAV at which shares are traded. In addition, it will consider buying back shares in the market between tenders, when it is considered to be in the interests of shareholders to do so.

On 16 September 2019, the Board announced that it would not be implementing the November semi-annual tender offer. Over the six months to 31 August 2019, the average discount to NAV (cum income) was 4.0% and the discount to NAV on a cum income basis (diluted for treasury shares) as at close of business on 13 September 2019 was 1.5%.

At a meeting held on 23 March 2020, the Board announced that over the six months to 29 February 2020, the average discount to NAV (cum income) was 3.3% and the discount to NAV on a cum income basis (diluted for treasury shares) as at close of business on 20 March 2020 was 5.3%. Given this, and the extreme volatility in the general market, as well as in the Company’s shares, the Board concluded that it was not in the interests of shareholders as a whole to implement a semi-annual tender offer in May 2020.

The Board will continue to monitor the Company’s discount to NAV and will look to buy back shares and/or operate six monthly tender offers if it is deemed to be in the interests of shareholders as a whole. During the six month period under review, the Company repurchased 390,000 ordinary shares under the share buyback authority. Since the period end, and up to the date of this report, no further ordinary shares have been repurchased by the Company.

OUTLOOKThe coronavirus outbreak and containment measures have continued to disrupt the world’s economies and asset markets, despite significant monetary steps having been taken. The scale of market moves has been reminiscent of the global financial crisis and some sectors will be particularly badly impacted. The depth and duration of the economic impact is unclear, as there is considerable uncertainty around how long containment measures will be needed and how quickly economic activity will restart.

The outlook for Europe as a whole is dependent to some extent on whether the measures put in place by the European Central Bank, the European Commission and the European Investment Bank will be enough to underpin the European economy, safeguard livelihoods, and drive the recovery. We also need to see how successful countries reopening earlier, including Denmark, Switzerland and Germany, will be in terms of containing the coronavirus spread.

The Eurozone should benefit from accommodative monetary conditions and liquidity support by the European Central Bank, the lifting of the trade war uncertainty and a recovery in global manufacturing. We believe that the Portfolio Managers’ active, bottom-up, fundamental stock selection approach will help uncover investment opportunities at attractive valuations.

ERIC SANDERSON27 April 2020

INVESTMENT MANAGER’S REPORT

OVERVIEWThe Company’s share price and underlying NAV fell over the last six months to 29 February 2020. In this period, the Company’s share price fell by 0.5% and the underlying NAV by 1.0%. By way of comparison, the reference index, the FTSE World Europe ex UK Index returned -5.1% during the same period (all percentages calculated in sterling terms with dividends reinvested).

Despite headwinds from US-China trade tensions, falling German Industrial Production and confidence, as well as political volatility, the European ex UK market rose during the first four months of the period. At the beginning of 2020, markets experienced the unwind of a ‘hope-trade’ which had driven banks and autos higher during the fourth quarter of 2019 on expectations for improved output and profitability in 2020. The Company continued to hold lower weightings to those sectors as our analysis suggested that earnings forecasts for banks remained too high going into 2020. Equally, a host of meetings with auto manufacturers and suppliers highlighted that the auto industry likely faces another difficult year in 2020.

Risk significantly increased towards the end of the period due to fears of the spread of COVID-19. In particular, January and February 2020 were challenging months for European ex UK markets, as well as equity markets around the world. Markets fell sharply as fears over the coronavirus and its implications heightened following the first severe cases of the coronavirus in the Western world, particularly in Italy.

The Company outperformed the reference index over the six-month period, driven by strong stock selection while sector allocation was also positive. 2019 proved an exceptionally strong year for both performance of the market and the Company, as performance was aided by our allocation to real world cyclicals and particularly strong stock selection. During the market sell-off at the end of the period, the portfolio also held up reasonably well, supported by our preference for high quality companies, with strong balance sheets and more growth optionality.

PORTFOLIO ACTIVITYThe Company’s performance outcome was driven by stock selection in the industrials, health care and consumer services sectors, as well as a higher allocation to the technology sector. Performance was positively aided by both a higher weighting to industrials relative to the reference index, as well as stock selection. A position in chemicals business Sika was the top performer during the period. The company acquired its rival Parex in a deal that is likely to allow the company to realise cost synergies through optimised production. The company further posted positive results confirming improved organic growth and increasing confidence around a margin recovery.

A position in Irish-listed buildings company Kingspan also performed strongly, particularly following the UK election in December as election results were taken positively and risk premia placed on the UK stock market decreased. The Company also benefited from a higher allocation and positive stock selection in the technology sector. Shares in semiconductor name ASML performed strongly on evidence that inventories had peaked and a recovery in demand was likely.

Relative to the reference index, the Company saw strong returns from a lower allocation to the oil & gas sector, as well as accurate stock selection. For example, not owning any of the large-cap oil majors, such as Total, was beneficial for performance. Our exposure to this sector is highly selective. We own the global leader in renewable biofuels, Neste OYJ, which performed strongly against the weak sector backdrop. Market fundamentals for renewable fuels are strong, as they offer both the auto and aviation industry a route to meeting carbon targets. The airline industry aims to be carbon neutral by 2050 and more efficient engines, as well as renewable fuels, can play a big part in meeting those targets. We believe demand will outstrip supply for the foreseeable future, which is a good environment for value creation and share price outcomes.

Strong earnings updates proved an important driver of positive active returns over the period, with upgrades seen across a breadth of companies in the portfolio. Within health care, the Company benefited from owning positions in Straumann Holding and Lonza Group. Dental implant maker Straumann reported full year revenue growth of 17%, beating consensus expectations. Shares in Swiss biotechnology and speciality chemicals company Lonza also rose due to strong 2019 results. The company reported better-than-expected sales and profit, driven by strength in their pharma and biotech division where they are seen as one of the global leaders in contract manufacturing of high-end drugs.

Negatively, the Company’s lower allocation to ‘safe haven’ assets, when compared with the reference index, detracted. In this context, the Company experienced some relative losses versus the reference index due to not holding large benchmark constituents considered less economically exposed and thus lower risk, such as Roche, particularly during the sell-off at the start of 2020. The Company’s lower weighting to utilities also impacted performance negatively, as did not owning Enel and Iberdrola.

A number of positions including Rémy Cointreau, Adidas and Kering were caught up in fears around the coronavirus. Both travel retail and Chinese New Year are important sales occasions for luxury goods companies such as Kering and spirits producers such as Rémy Cointreau, while sportswear brands like Adidas were hit by closed stores and lower consumption in China. While we realise that the travel ban and store closures related to COVID-19 could affect short-term results for these companies, we are confident that it will not alter the medium to long-term earnings power of these businesses. As and when coronavirus fears subside, we expect demand to recover, although the timing and speed of recovery remains uncertain.

The Company’s position in French aerospace stock Safran which is exposed to the travel industry also detracted. Towards the end of 2019 shares fell given Boeing’s announcement to temporarily suspend its production of its 737 Max programme, for which Safran delivers engines. Although shares had recovered slightly, they again came under pressure at the beginning of the year given corona-related flight restrictions. The anticipated weakness in air traffic may lead to some short-term revenue impact, however, we believe this is more than reflected in its valuation now.

Over the period we made few changes to the composition of the Company. Within oil & gas, we initiated the above-mentioned holding in Finnish company Neste. The market for renewable fuels is growing not just for road transportation, but there is also potential to move to aviation fuels in due course. This remains our only holding in the sector.

At the beginning of 2020, we took advantage of the market pull-back to add a position in Atlas Copco which we see as one of the most attractive industrial businesses in our universe. The company sells mission critical components such as compressors used in petro-chemical and processing plants, and vacuum pumps used in the production of semi-conductor chips and equipment. The growing installed base supports the company’s after-market and services business which gives high and growing recurring revenues. The company generates high returns on capital, is extremely cash generative and has a net cash balance sheet. This purchase was funded by the sale of Vinci which owns an extensive airport portfolio which was at risk of coming under pressure on the back of reduced traffic flows and passenger spend.

At the beginning of the period we also exited our position in Thales, as a combination of execution issues together with insufficient upside, led us to reallocate capital elsewhere. In combination, these two sales lowered our allocation to the industrials sector. Overall, we retain our core exposure to companies with predictable business models, higher than average returns on capital, strong cash flow conversions and opportunities to reinvest that cash flow into future growth projects at high incremental returns.

OUTLOOKThe current global economic downturn is politically induced; a consequence of governments taking actions to preserve life due to the outbreak of a global pandemic. As a result, assessing the shape of the economic recovery will likely come down more to health and disease related data than traditional indicators or outlook for profits for specific companies. At BlackRock, we have invested significant resource in tracking of disease related data points by region in order to understand the potential fallout and indeed the speed at which economies can start to normalise. We have already seen tentative signs of recovery in China as lockdown is lifted, with consumer spending coming back and Purchasing Manager Indices quickly moving back to expansionary territory. However, risk of a second-wave of infection remains and ability to fend this off will be important.

From a fundamental perspective it is evident that structural challenges remain in numerous end markets within Europe, which makes it paramount to take an active approach to investing with clearly defined investment criteria. Our research focuses on companies which are often exposed to secular growth drivers, with superior market positions and products, brands or contract structures that should allow for a greater degree of value creation over time. As always, we will be guided by our understanding of company earnings and cashflows on a multi-year basis, looking for exceptional companies which can prove resilience of their business model over the long term.

STEFAN GRIES AND SAM VECHTBlackRock Investment Management (UK) Limited27 April 2020

PORTFOLIO ANALYSIS 29 FEBRUARY 2020

TEN LARGEST INVESTMENTS

1 + SAP (2019: 3rd)TechnologyMarket value: £21,308,000Share of investments: 6.0%One of the leading global enterprise software providers. Its S4/Hana software and database solution appears a ‘must own’ product for a large existing client base in need of enhanced data analytics capabilities. In our view the company is one of Europe’s best defensive assets, with an enviable starting position of more than 75% of total worldwide transaction revenue having a touchpoint with an SAP system. Further, customers’ transitions to cloud based software improves the resiliency of the earnings and cash flows and we expect recurring revenue to amount to 70-75% of group sales by the year-end and continue to grow in the next few years.

2 + RELX (2019: 9th)Consumer ServicesMarket value: £20,269,000Share of investments: 5.7%A multinational information and analytics company which has high barriers to entry in most of its divisions, including scientific publishing. The capital light business model allows for a high rate of cash flow conversion with repeatable revenues built on subscription-based models. The business also benefits from structurally increasing usage of data globally, which supports their data analytics business.

3 - Novo Nordisk (2019: 1st)Health CareMarket value: £20,044,000Share of investments: 5.7%A Danish multinational pharmaceutical company which is a leader in diabetes care. We expect growth in earnings and cashflows, driven by demand for recently launched Ozempic which treats Diabetes type 2. Overall, we believe Novo Nordisk offers attractive long-term growth potential at high returns and sector leading cash flow conversion, with any excess in cash being returned to shareholders.

4 + Sika (2019: 5th)IndustrialsMarket value: £19,874,000Share of investments: 5.6%A speciality chemical company with a leading position in both construction chemicals and in bonding agents for the automotive industry. Sika has proprietary technology within adhesives, which has an increasing array of applications as technology advances. The recent acquisition of rival Parex allows Sika to realise cost synergies through optimising its production footprint and through enhanced direct distribution channels.

5 + Royal Unibrew (2019: 6th)Consumer GoodsMarket value: £18,234,000Share of investments: 5.2%A brewing and beverage company based in Denmark. Through a number of well-timed acquisitions, the group has transformed itself into a multi-beverage company offering attractive growth in soft drink niches at high returns, with significant potential to export their brands with strong European heritage into international markets.

6 - Safran (2019: 2nd)IndustrialsMarket value: £17,734,000Share of investments: 5.0%A French multinational supplier of systems and equipment for aerospace, defence and security. The industry is emerging from a heavy investment period in new planes and engines and we see Safran as well placed to benefit from continued strength in its best in class after-market business, as well as strong execution in its LEAP engine programme which should drive growth for the next five to ten years.

7 - Adidas (2019: 4th)Consumer GoodsMarket value: £17,100,000Share of investments: 4.8%A global sportswear manufacturer based in Germany. Brand momentum remains strong across geographies and we see potential for further market share gains in the key US market. Given the oligopolistic nature of the lifestyle apparel and footwear markets, we see plenty of opportunity for Adidas to continue to improve group margins and free cash flow conversion. Lastly, with the balance sheet being in a net cash position already, shareholders are likely to benefit from further share buybacks over time.

8 - Lonza Group (2019: 7th)Health CareMarket value: £16,834,000Share of investments: 4.8%A Swiss biotechnology and speciality chemicals company, Lonza has established itself as one of the leading contract-manufacturers of high-end biological drugs, as well as cell and gene therapy. Overall, we see those end markets growing at double digit rates well into 2025 and beyond, which leaves Lonza well placed to deliver attractive growth regardless of the prevailing macro-economic environment.

9 + Kering (2019: 26th)Consumer ServicesMarket value: £16,585,000Share of investments: 4.7%A French luxury group owning brands such as Gucci, Yves Saint Laurent and Bottega Veneta. We believe Kering is one of the winners in a ‘winner takes all’ market, given the strength and resilience of its brands. We see strong brand momentum, in particular for its Gucci and Bottega Veneta brands, with the latter having significant potential to improve margins over time. Overall, Kering remains a well-positioned company with a strong balance sheet that offers optionality for both increased shareholder returns, as well as value accretive deals.

10 = ASML (2019: 10th)TechnologyMarket value: £15,856,000Share of investments: 4.5%A Dutch company which specialises in the supply of photolithography systems for the semiconductor industry. The company is at the forefront of technological change and invests in leading research and development to capture the structural growth opportunity supported by growth in mobile devices and microchip components. The high barriers to entry within the industry give ASML a protected position, with strong pricing power allowing growth in margins whilst they continue to innovate. The company has strong management who aim to create long-term value for the business, whilst returning excess cash to shareholders.

All percentages reflect the value of the holding as a percentage of total investments. Together, the ten largest investments represent 52.0% of the total investments (ten largest investments as at 31 August 2019: 52.8%).

INVESTMENTS AS AT 29 FEBRUARY 2020

All investments are in ordinary shares unless otherwise stated. The total number of investments held at 29 February 2020 was 36 (31 August 2019: 33).

As at 29 February 2020, the Company did not hold any equity interests comprising more than 3% of any company’s share capital.

INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT

The Chairman’s Statement and the Investment Manager’s Report give details of the important events which have occurred during the period and their impact on the financial statements.

PRINCIPAL RISKS AND UNCERTAINTIESThe principal risks faced by the Company can be divided into various areas as follows:

• Counterparty;• Investment performance;• Legal & Compliance;• Market;• Operational;• Financial; and• Marketing.

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 31 August 2019. A detailed explanation can be found in the Strategic Report on pages 26 to 28 and in note 15 on pages 71 to 76 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock at blackrock.com/uk/brge.

In the view of the Board, the outbreak of an infectious respiratory illness caused by a novel coronavirus known as COVID-19, first detected in China in December 2019 and has developed into a global pandemic, has fundamentally altered the nature of the risks as reported in the Annual Report and Financial Statements. The coronavirus has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in health care service preparation and delivery, prolonged quarantines, cancellations, supply chain disruptions and lower consumer demand, as well as general concern and uncertainty. The impact of COVID-19 has adversely impacted affected the economies of many nations across the entire global economy, individual issuers and capital markets, and could continue with extents that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to less established health care systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.

GOING CONCERNThe Directors, having considered the nature and liquidity of the portfolio, the Company’s investment objective and the Company’s projected income and expenditure, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Company has a portfolio of investments which are considered to be readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Ongoing charges for the year ended 31 August 2019 were 1.08% of net assets and it is expected that this is unlikely to change significantly going forward.

RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE MANAGERBlackRock Fund Managers Limited (BFM) was appointed as the Company’s Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the fees payable are set out in note 4 and note 11. The related party transactions with the Directors are set out in note 10.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Disclosure Guidance and Transparency Rules (DTR) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

The Directors confirm to the best of their knowledge that:

• the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with applicable UK Accounting Standards and the Accounting Standards Board’s Statement ‘Half Yearly Financial Reports’; and• the Interim Management Report, together with the Chairman’s Statement and Investment Manager’s Report, include a fair review of the information required by 4.2.7R and 4.2.8R of the FCA’s Disclosure Guidance and Transparency Rules.

This half yearly financial report has not been audited or reviewed by the Company’s auditor.

The half yearly financial report was approved by the Board on 27 April 2020 and the above responsibility statement was signed on its behalf by the Chairman.

ERIC SANDERSONFor and on behalf of the Board27 April 2020

FINANCIAL STATEMENTS

INCOME STATEMENT FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020

The total column of this statement represents the Company’s profit and loss account. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. All income is attributable to the equity holders of the Company.

The net profit/(loss) on ordinary activities for the period disclosed above represents the Company’s total comprehensive income/(loss).

STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020

1 Final dividend paid in respect of the year ended 31 August 2019 of 4.10p per share was declared on 22 October 2019 and paid on 10 December 2019.2 Final dividend paid in respect of the year ended 31 August 2018 of 4.00p per share was declared on 24 October 2018 and paid on 10 December 2018.3 Interim dividend paid in respect of the year ended 31 August 2019 of 1.75p per share was declared on 1 May 2019 and paid on 31 May 2019. Final dividend paid in respect of the year ended 31 August 2018 of 4.00p per share was declared on 24 October 2018 and paid on 10 December 2018.

The transaction costs incurred on the acquisition of investments amounted to £73,000 for the six months ended 29 February 2020 (six months ended 28 February 2019: £75,000; year ended 31 August 2019: £112,000). Costs relating to the disposal of investments amounted to £13,000 for the six months ended 29 February 2020 (six months ended 28 February 2019: £20,000; year ended 31 August 2019: £43,000). All transaction costs have been included within capital reserves.

The capital redemption reserve is not distributable profits under the Companies Act 2006. The special reserve may be used as distributable profits for all purposes and, in particular, for the repurchase by the Company of its ordinary shares and for payment as dividends. In accordance with the Company’s articles, net capital reserves may be distributed by way of the repurchase by the Company of its ordinary shares and for payment as dividends.

BALANCE SHEET AS AT 29 FEBRUARY 2020

STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020

NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020

1. PRINCIPAL ACTIVITYThe principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010.

2. BASIS OF PREPARATIONThe Company presents its results and positions under FRS 102, ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (FRS 102), which forms part of revised Generally Accepted Accounting Practice (New UK GAAP) issued by the Financial Reporting Council (FRC) in 2013 and updated in March 2018.

The condensed set of financial statements has been prepared on a going concern basis in accordance with FRS 102 and FRS 104, ‘Interim Financial Reporting’ issued by the FRC in March 2015 and the revised Statement of Recommended Practice – ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (SORP) issued by the Association of Investment Companies (AIC) in November 2014 and updated in October 2019 and the provisions of the Companies Act 2006.

The revised SORP issued in October 2019 is applicable for accounting periods beginning on or after 1 January 2019, therefore the Company has adopted the new SORP for the accounting year beginning 1 September 2019. As a result, there will be an amended presentation of movements in investments held at fair value through profit or loss in the notes to the financial statements, which will be included as part of the 2020 Annual Report and Financial Statements. As this note is not included as part of the Half Yearly Financial Report and Financial Statements, there is no impact on the Half Yearly Financial Report and Financial Statements as a result of the adoption of the revised SORP.

The accounting policies applied for the condensed set of financial statements are as set out in the Company’s Annual Report and Financial Statements for the year ended 31 August 2019.

3. INCOME

Dividends and interest received in cash during the period amounted to £850,000 and £12,000 (six months ended 28 February 2019: £1,155,000 and £nil; year ended 31 August 2019: £5,062,000 and £2,000).

No special dividends have been recognised in capital during the period (six months ended 28 February 2019: £nil; year ended 31 August 2019: £nil).

4. INVESTMENT MANAGEMENT FEE

The investment management fee is levied quarterly, based on 0.85% per annum of net asset value on the last day of each month. The investment management fee is allocated 80% to capital reserves and 20% to the revenue reserve.

5. OTHER OPERATING EXPENSES

6. DIVIDENDThe Directors have declared an interim dividend of 1.75p per share for the period ended 29 February 2020, payable on 10 June 2020 to shareholders on the register on 15 May 2020. The total cost of the dividend based on 84,323,101 ordinary shares in issue at 27 April 2020 was £1,476,000 (28 February 2019: £1,488,000).

In accordance with FRS 102, Section 32 ‘Events After the End of the Reporting Period’, the interim dividend payable on the ordinary shares has not been included as a liability in the financial statements, as interim dividends are only recognised when they have been paid.

7. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARERevenue and capital returns per share and net asset value per share are shown below and have been calculated using the following:

There were no dilutive securities at 29 February 2020 (28 February 2019: nil; 31 August 2019: nil).

8. SHARE CAPITAL

During the period 390,000 (six months ended 28 February 2019: 50,000; year ended 31 August 2019: 710,000) ordinary shares were repurchased and held in treasury for a total consideration, including expenses, of £1,506,000 (six months ended 28 February 2019: £173,000; year ended 31 August 2019: £2,537,000). Additionally, during the period there was no tender offer (six months ended 28 February 2019: one; year ended 31 August 2019: one) and no shares (six months ended 28 February 2019: 1,036,590 shares; year ended 31 August 2019: 1,036,590 shares) were transferred to treasury for a total consideration of £nil (six months ended 28 February 2019: £3,501,000; year ended 31 August 2019: £3,501,000). No treasury shares were issued or cancelled during the period (six months ended 28 February 2019: nil; year ended 31 August 2019: nil).

9. VALUATION OF FINANCIAL INSTRUMENTSFinancial assets and financial liabilities are either carried in the Balance Sheet at their fair value (investments) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash and cash equivalents and overdrafts). Section 34 of FRS 102 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note on page 63 of the Annual Report and Financial Statements for the year ended 31 August 2019.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.

The fair value hierarchy has the following levels:

Level 1 – Quoted market price for identical instruments in active marketsA financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Company does not adjust the quoted price for these instruments.

Level 2 – Valuation techniques using observable inputsThis category includes instruments valued using quoted prices for similar instruments in markets that are considered less than active, or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Level 3 – Valuation techniques using significant unobservable inputsThis category includes all instruments where the valuation technique includes inputs not based on market data and these inputs could have a significant impact on the instrument’s valuation.

This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. The determination of what constitutes ‘observable’ inputs requires significant judgement by the Investment Manager.

The table below is the analysis of the Company’s financial instruments measured at fair value at the balance sheet date.

There were no transfers between levels for financial assets and financial liabilities during the period/year recorded at fair value as at 29 February 2020, 28 February 2019 and 31 August 2019. The Company did not hold any Level 3 securities throughout the six month period ended 29 February 2020 (six month period ended 28 February 2019: nil; year ended 31 August 2019: nil).

10. RELATED PARTY DISCLOSUREThe Board consists of four non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. With effect from 1 September 2019, the remuneration of the Chairman was increased from £38,000 to £41,000, the remuneration of the Chairman of the Audit and Management Engagement Committee was increased from £31,000 to £32,500 and for the other Directors the remuneration was increased from £27,000 to £28,000.

As at 29 February 2020, the following members of the Board held shares in the Company: Eric Sanderson held 4,000 ordinary shares, Peter Baxter held 5,000 ordinary shares and Paola Subacchi held 1,540 ordinary shares.

Since the period end and up to the date of this report there have been no changes in Directors’ holdings.

The transactions with the AIFM and Investment Manager are stated in note 11.

11. TRANSACTIONS WITH THE AIFM AND THE INVESTMENT MANAGERBlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed on pages 30 and 31 in the Annual Report and Financial Statements for the year ended 31 August 2019.

The investment management fee due for the six months ended 29 February 2020 amounted to £1,440,000 (six months ended 28 February 2019: £1,253,000; year ended 31 August 2019: £2,653,000).

At 29 February 2020, £1,440,000 was outstanding in respect of the investment management fee (six months ended 28 February 2019: £1,249,000; year ended 31 August 2019: £1,994,000)

In addition to the above services, BlackRock provided the Company with marketing services. The total fees paid or payable for these services for the six months ended 29 February 2020 amounted to £47,000 excluding VAT (six months ended 28 February 2019: £55,000; year ended 31 August 2019: £103,000). Marketing fees of £117,000 excluding VAT were outstanding at 29 February 2020 (28 February 2019: £128,000; 31 August 2019: £177,000).

12. CONTINGENT LIABILITIESThere were no contingent liabilities at 29 February 2020 (28 February 2019: £nil; 31 August 2019: £nil).

13. PUBLICATION OF NON STATUTORY ACCOUNTSThe financial information contained in this half yearly report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 29 February 2020 and 28 February 2019 has not been audited.

The information for the year ended 31 August 2019 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the auditor on those accounts contained no qualification or statement under sections 498 (2) or (3) of the Companies Act 2006.

14. ANNUAL RESULTSThe Board expects to announce the annual results for the year ending 31 August 2020 in late October 2020. Copies of the annual results announcement can be obtained from the Secretary on 020 7743 3000 or cosec@blackrock.com. The Annual Report should be available by the end of October 2020 with the Annual General Meeting being held in December 2020.

15. POST BALANCE SHEET EVENTSAs noted in the Chairman’s Statement, since 29 February 2020 equity markets have fallen significantly due primarily to concerns around the scale of the impact of COVID-19 on the global economy. Subsequent to the period end, the net asset value per share of the Company has decreased by 6.8% (6.8% with dividends reinvested) from 391.61p per share to 364.84p per share and the Company’s share price has decreased by 7.7% (7.7% with dividends reinvested) from 379.00p per share to 350.00p per share as at 24April 2020. The Company’s reference index has decreased by 9.3% from 1,383.31 to 1,254.07 on a total return basis.

This is primarily attributed to market movements and currency movements, including the impact on financial markets of increasing fears over the spread of COVID-19. The Board and the Manager continue to monitor investment performance in line with the investment objective. The Board has determined that these events are non-adjusting subsequent events.

12 Throgmorton AvenueLondonEC2N 2DL

27 April 2020

For further information please contact:Melissa Gallagher, Co-Head, Closed End Funds, BlackRock Investment Management (UK) Limited – 020 7743 3893Stefan Gries, Fund Manager, BlackRock Investment Management (UK) Limited – 020 7743 3000Emma Phillips, Media & Communications, BlackRock Investment Management (UK) Limited – Tel: 020 7743 2922Press enquires:

Ed Hooper, Lansons CommunicationsTel: 020 7294 3620E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com

ENDThe Half Yearly Financial Report will also be available on the BlackRock website at www.blackrock.co.uk/brge. Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.